Help me grow

November 17, 2008 6:41 AM

So I started my own design company and went into full-time freelancing 6 months ago. It's OK. Not great, but it pays bills. But I'm confused what to do next.

I want this business to grow somehow, in any direction. I want to see some progress. I'm not sure how to do this. I guess I don't want to work 8-10 hours a day forever, for an average salary. I am the only employee for now. Should I hire more freelancers to work for me? Or should I get big gigs first and then hire people? Should I save some money, buy equipment and maybe provide printing service along with design? Should I try to design actual products and maybe sell them? Should I try all that or specialize only in one thing? I provide general design/retouching/webdesign services. How to get from one man band to small/middle size succesful business?

posted by anonymous to work & money (10 comments total)

The first step is to find the constraint that is stopping you from growing.

Is it that you don't have enough time and need more hours in the day?

Is it you can't reliably get new work?

Is it you only have the same customers and don't get new ones?

Whatever it is, identify the binding constraint and then solve the constraint. You can't just cast about looking for any sort of change to shake things up and see what happens.
posted by Pants! at 7:34 AM on November 17, 2008

Do you have more work than you can handle? My freelancing business grows when I've landed enough clients that I can't get it all done in 10-hour, or 12-hour, days. But I like to handle as much of my own work as possible because 1) it's mine and I want it to reflect my talents; and 2) doing the work myself means not paying anyone else.

If you're needing to land more clients or projects, check out Gitomer's "Little Red Book of Selling." It's cheesy but effective, and it will get your name out there in front of new clients. When I get bored or worried that I don't have enough cash coming in, I expand my reach and look for new clients in related, but different and interesting, fields.

After just six months, I'd think your emphasis should be on sustaining the business, not growing. It's easy to be eager, but the real task now is to ensure that you'll have steady work even if you lose some projects, or if clients cut back.
posted by hamster at 7:48 AM on November 17, 2008

Should I save some money, buy equipment and maybe provide printing service along with design?

There are many paths you could take to create a successful business. The best one will depend on what kind of small/middle size business you envision yourself owning. But I can tell you for sure, from the experience of an employee, that buying equipment and providing print service is not a path to success. Printing is not a growth industry in the age of the Internet. When the offset print company I worked for went bankrupt in 2002, my boss (who had spent her entire career in printing, starting in Sales for Xerox) opened her own design/marketing company that I went to work for next. Rule #1 at our new company was that we would never own any piece of equipment larger than your basic office desktop printer. (Printing equipment = high overhead costs and low profit margins.) I don't work there any more, but 6 years later they're still in business and growing.

on preview: hamster's advice is very good.
posted by junkbox at 8:08 AM on November 17, 2008

The best way to grow a business, in my opinion, is to find your niche. "I'm a web designer" is an okay place to start; "I specialize in such-and-such aspect of design for XYZ category of web application, focusing on industry Foo" is -- well, it worked for me. Over the long term this makes it easier to find customers, since people in the same industry tend to talk to one another and pass your name around. It also means you'll have more expertise at whatever you're focusing on, because you're not scattering your attention.

Absolutely do not hire people until you need them. Certainly, keep your eyes open, and if you see other freelancers who you believe would make good hires later on, keep in touch with them -- but committing to a salary before you have the means to pay it is asking for trouble.

As for buying equipment and branching out into print services -- I know just enough about this to know that print is an entirely different world from web, you need a very different skillset to succeed there.
posted by ook at 8:09 AM on November 17, 2008

This is a good question to ask, but it's a little too soon. Six months is not enough time to see significant growth as a freelancer. Your business relationships are too new: from your perspective, they're all you've ever known, but from your clients' perspective, you're still a new kid on the block. You have to prove yourself a little more before you can get trusted access to the resources and partnerships which will permit safe growth.

Notice I said "safe" growth. You can certainly be more aggressive and make significant investments now (employees, equipment), but that increases your risk and liability without necessarily adding to the long-term payoff.

If you're paying the bills six months in, you're doing great. Keep doing good work for your clients/partners, and eventually your prospects should expand to the point at which you'll be able to see growth potential. If you're still feeling stagnant in another six to twelve months, come back and ask again.
posted by DrJohnEvans at 10:58 AM on November 17, 2008

You can do any of the things that you asked, but I don't think anyone else can give you good advice on what you've provided. It depends on your personal preference and the market you're in. Do you enjoy managing people? Hire your work out to other freelancers. Are there some low-level tasks that are eating your time? Hire a production assistant. Do you have a good partnership prospect with a client? Formalize that agreement. Is there something you're not doing much of that you'd rather be doing? Ask for it. Is there a lucrative service that you're asked for but can't provide? Then invest in the equipment or classes so you can.

Oh and the rule of thumb for working longer hours than you want to: Raise your rate. It's clearly not high enough.
posted by Ookseer at 11:49 AM on November 17, 2008

Identify your core competencies - what you do best. Take a look at the needs of the marketplace. Is anything standing out to you that could be done better? Is there a need not being met?

Specialize in meeting a particular need, and you can grow with the demand for meeting that need. The speed and method of growth will depend on what it is you are doing.

If you match your skills with the marketplace, a path to growth will become more clear. Of course the trick is to identify these opportunities.
posted by Nixie Pixel at 3:39 AM on November 18, 2008

I would avoid going into printing. There are so many printing services out there that the profit margins on that part seem, to me, very low. I'd certainly consider sort of "reselling" printing services however. If your volume gets high enough you could probably work up an arrangement with a local printer to get a discount on their services.

The problem with many big gigs is you often have to be big in order to get them. So I would avoid them until you have found a way to grow the business on your own.

Every time you add another person to your business, you are further dividing up the total income of the business. So there's a delicate balance between having 40-50 hours of work per week to getting to the point where you have 70-80 (at which point you *need* another person to get things done). The problem is in that middle part. Honestly, what I would do is, rather than work more, work up. Which is to say, find either a niche market or higher level customers who are willing to pay more per hour for higher quality work. This means setting yourself off from the competition, which in the design world can be a bit difficult, I imagine.

If you're very good at webdesign, one thing you might want to do is seek out web development firms with strong programming but weak design. I'm a pretty lousy designer but make pretty decent web applications. So my problem is I can make a site that works but it doesn't look very pretty. I mean, it looks serviceable but it doesn't have that extra patina of professionalism. If this path looks promising, what I would do is familarize myself with the major web programming languages and how they generally deal with layout and design. You don't have to learn how to program in them, only how you could insert your own templates or designs into them. This might mean, for example, playing with skins on WordPress, Joomla, Drupal, and MediaWiki. I'm pretty sure these all run on PHP. My biggest frustrations when working with designers is many of them don't "get" the limitations and constraints that might be present. If you present yourself as someone who gets web programming and can make it look pretty, that represents a good quantity of work (and work you can probably charge more per hour for than you would for ordinary design).

I would think long and hard before making this a "business" -- i.e. a multiple employee shop. A design shop is going to be very hands on. You'll still be working 8-10 hours a day (perhaps more) and you'll also have to start doing non-design stuff, like accounting and figuring out taxes on your employees and so on. When business is slow, you'll still have to be paying your employees a monthly salary, which means that your own salary might have to suffer.

I should disclose that aside from my pie-in-the-sky dream of opening my own restaurant someday (probably in 20-30+ years), I have zero desire to run my own business. So I'm probably more negative on it than others might be. But the truth is, many small businesses fail. I would stick to being a freelancer, work on networking to get more job opportunities. If you get overloaded with work, don't hire someone new, just slowly raise your rates until the work balances out. Also, in my experience it's better to charge this kind of work by the hour rather than the project unless they are really clearly designed and you know that the value of the product sold (i.e. a designed logo) has a worth greater than the amount of time you would spend on it (so, for example, if you charge $45 an hour and it would take you 4 hours to design a logo and get it approved, that's only $180. If you think the companies you are working for would pay $500 for corporate identity/logo redesign, charge a flat rate).

Keep involved with any local groups for freelancers in the design/tech field. If a job comes your way that you can't handle, get in touch with another freelancer that can and hopefully they will send work your way in return. If you do land a big job, turn to other freelancers rather than hiring other people. In this economy, there are probably plenty of freelancers out there who need more work, and the advantage of using them is you don't have to deal with paying their salaries, just paying them for the work that they do. The most honest way to do this is basically give them the same rate you're charging (minus maybe a finder's fee or something). Which is to say, don't charge your customer $80/hour and then pay them $40/hour.
posted by Deathalicious at 9:39 AM on November 18, 2008

Oh and I should point out that if you are paying your bills right now you are doing very well. It'd be nice to be making a nice salary but the fact that you are able to support yourself, especially during an economic downturn, is really good news. Focus on establishing a reputation for good work and then when the economy picks up you will be doing a lot better.
posted by Deathalicious at 9:41 AM on November 18, 2008

How to get from one man band to small/middle size succesful business?

Much good advice here, I will probably just be putting my spin on things but as a freelancer myself, I'd like to weigh in. I particularly liked what Deathalicous said so read that again!

Here's my take:

First, you need to think long and hard about how you define success. Being successful does not necessarily entail having employees or being "middle sized." Do you want the freelancer/consultant type of business model where you are selling your own expertise and talent? Or are you good at directing, managing and selling the work of others? Which will work best for you depends on temperament, skill set, interest, and what you want to achieve. What life style appeals to you? Do you like independence? Do you thrive on team work? What's most important to you? You need an honest self assessment of preferences and abilities.

There's also a middle ground - you can remain a sole practitioner but create a "virtual agency" by developing a network of trusted partners - other professionals who can provide skill sets you don't have or who can take on your overflow. I have a model like that - I have 3-4 trusted people I work with who have talent in other areas than my specialties. They are people I can brainstorm with and they help fill some of my social interaction needs. We each have our primary clients but help each other out for specific skills, and occasionally pinch hit to allow for client-free vacations. Support and teamwork from creative professionals but none of the headaches of being a boss, my idea of heaven!

Another barometer of success you need to define is what you hope to achieve income wise. If you want to make a very comfortable living, you can do that working largely on your own. But if you have a very high income goal, you may need to leverage a business model.

As others have suggested, I agree that you need to grow by focusing ("specializing") and raising your rates. Until you are more secure, avoid spending money unless you have to. If you are only just paying your bills, you are too green in your business to think about taking on the enormous responsibility of payroll.

If the freelancer/consultant model appeals to you, I have some suggestions. You need to make a plan about where you want to be and systematically set out to get there. Start by analyzing what you want to earn - aim high. Let's say you would like to earn $100,000 a year and you have a total universe of about 2500 hours a year you would be willing to work. First, divide that number of hours in half to account for new business development, administration, unbillable hours, vacation and holidays. Dividing your 100k goal by the remaining 1250 hours, you would need to bill at least $80 an hour to make your goal.

At first, you may need to take jobs at a lower hourly rate and make it up in volume just to pay bills, but keep narrowing your niche - both for the type of work you do and the industry(ies) that you do it for. By focusing, you will specialize and strengthen your expertise and become more valuable in one industry or a small number of industries. That will allow you to raise your rates. It will also simplify and target your marketing - ook described this well. Nixie Pixel's advice about specializing in meeting a particular need is right on the money, too.

I had a plan like this - it took about 3.5 years to average out to my targeted hourly rate. I kept "trading up" accounts until I had a greater mix of higher paying clients and a smaller group of lower paying clients. In doing so, I did not abandon any "good" clients (I did happily jettison one or two clunkers, tho). I either gradually raised existing clients' rates, or I helped them find other alternatives from within my network. Don't burn bridges!

You may need to make some hard choices. Among your skills, you may have some that are valued in the market more highly than others, and as luck often has it, they may not be your favorites. For another example, I started with travel-related marketing - that was fun, but I had a lot of competition. When I focused on insurance, there was a smaller universe of serious competition, so I could command higher rates. Less fun, but much more lucrative. You need to decide what your priorities are at this phase of your life.

Good luck. If you are paying your bills at 6 months, you are further along than I was at that point. I had a year or so of stark poverty, during which mefi was 100% of my entertainment.

I think you should add Deathalicious to your virtual network - sounds like you both have skill-sets that might match up! Let me know if you need insurance expertise ;-)
posted by madamjujujive at 11:01 AM on November 19, 2008